U.S. confirms duties on imports of steel threaded rod from India

[Editor: This gives India Finance minister, a chance to impose similar anti--dumping duty on cheap steel imports, which is threatening the domestic sector] 

Photo: TRUSTe Blog

WASHINGTON, Tue Jul 8, 2014: - The United States on Monday confirmed import duties on shipments of steel threaded rod from India after finding the goods were made using unfair government subsidies and sold too cheaply in U.S. markets.

In its final ruling, the Department of Commerce said most imports of the rod, which were valued at an estimated $19 million in 2013, would face a dumping margin of 16.74 percent and a subsidy rate of 8.61 percent.

The rod is often used in commercial construction to support electrical conduits, pipes for plumbing, ductwork and sprinkler systems and for bolting together pipe joints in the waterworks industry.

The complaint was lodged by All America Threaded Products, Bay Standard Manufacturing and Vulcan Threaded Products. The U.S. International Trade Commission is due to make its final decision in the case by Aug. 17.

Courtesy: Reuters

Economic Survey: Steel output grew by 7.9% in past 5 yrs 

Photo: ElEzz Steel Trading 

July 09, 2014: India ranked as the fourth largest crude steel producer in the world during 2013 after China, Japan and USA. During the last fiscal, the country had produced 81.54 million tonnes of crude steel clocking a 4 percent increase over 2012-13.

Driven by a 7 percent rise in consumption and high utilisation ratio, steel production in India grew at a compound annual growth rate of 7.9 percent in the past five years, the Economic Survey said. "In the last five years, domestic crude steel production grew at a compound annual growth rate of 7.9 percent. Such an increase in production was driven by 9.8 percent growth in crude steel capacity, high utilisation rates and a 7 percent growth in domestic steel consumption," it said. 

India ranked as the fourth largest crude steel producer in the world during 2013 after China, Japan and USA. During the last fiscal, the country had produced 81.54 million tonnes of crude steel clocking a 4 percent increase over 2012-13. The capacity utilisation during 2013-14 stood at 82 percent. However, steel consumption during the year grew by just 0.6 percent, the survey said. Construction sector accounts for around 60 percent of the country's total steel demand while the automobile industry consumes 15 percent. Both the sectors were plagued by a slowdown in the economy. 

The consumption of steel depends on the growth of the economy. A sound economy ensures higher consumption. User industries such as construction and consumer durables had a bad run last fiscal resulting in a dip in demand.

Courtesy: Moneycontrol.com

WINNING STROKES: THINK DIFFERENT

In the morning note to the Premium Service members we asked to SHORT Nifty_Futures with a SL at around 7810, the Nifty_Futures made an intra-day low of 7,567.75, after opening at 7,650, giving good returns to Nifty traders. Where will the market go from here? How to play the Indian Stock Markets, post budget? To know all these join the Premium Service or Trade through my recommended brokerage  house, to maximize your returns. This market is not for the new-comers and novices, therefore, allow the experts to trade on your behalf. 

A buy call call was initiated today on MCX Ltd at Rs.678, for an intra-day target of Rs.686-696, SL--Rs.674. The stock touched Rs.720.40, intra-day. Financial Technologies (I) Ltd (FT), sold 1.02 mln shares of the company at Rs.664 per share in a bulk deal while Rakesh Jhunjhunwala bought 1 mln shares of the company in a bulk deal. This stock was recommended a much lesser price, earlier also.

The investors were asked to buy (or average) the shares of Western India Shipyard Ltd at Rs.2.50-2.55, for a target of Rs.3.5 in the short term. The government has asked for more coals to be imported from outside, due to failure of Coal India Ltd, the world's largest coal miners to meet the consumption demands, of Indian power companies. Hence, the shipping sector would be one of the biggest beneficiaries of this move. And ship building or repair industry being a part of that, would also have a rub-off effect Moreover, the government is likely to continue with the tax breaks for the ship building and repair sectors, in this budget.
Those who bought the shares of Allied Digital Services Ltd (Rs.20.85) at higher price, should complete the average, as the scrip could rise post Infosy Ltd's, June, 2014 quarter results, which is due this week. 

Rohit Ferro Tech set to commission pellet plant

[Editor: Manufacturer of ferro alloys Rohit Ferro-Tech Ltd is in the process of setting up an additional sub-merged arc furnace of 33 MVA and a captive power plant at its Jajpur unit in Odisha. Moreover, the cost of setting up a 600,000-tonne tonne capacity iron ore pellets manufacturing unit will be not less than Rs.400 crores. On 24 December, 2013, the Business Standard reported that, Rs.200 crore JV between RINL-MOIL in Andhra Pradesh was supposed to manufacture 50,000 tonnes of ferro alloys a year. Presently, with the total installed capacity of 300,000 mtpa, Rohit Ferro Tech Ltd has Market Cap of only Rs.133.12 Crore]

Photo: Relybulls Stock Broking Pvt. Ltd. 

SKP Group company Rohit Ferro Tech Ltd (RFTL), a leading Ferro Alloy manufacturer , is set to commence operations at its newly set up pellet plant in May, a senior official of the company told Steel Insights.

"We are going to commission our 0.6 million tons per annum (mtpa) pellet plant in Odisha soon. It would be commissioned in May," Rohit Ferro Tech's Director Rakesh Agarwal said. The pellet plant is being set up by its group company Ankit Metal and Power Ltd (AMPL).

"With the commissioning of pellet plant our group company AMPL would be more viable because we have enough stock of fines which would be utilised for pellet making and thus our cost of production of steel will come down," Agarwal said.

AMPL is currently producing around 200,000 tons of Billets and re-rolled products at Chhatna, Jorehira in West Bengal's Bankura district.

Meanwhile, the company also plans to commission a 67 MW captive power plant at its Jajpur plant in Odisha within next few months, Agarwal said. "The construction work for the captive power plant is going on in full steam and (the plant) is expected to be commissioned soon," he said.

The SKP Group is promoted by S K Patni, a well-known figure in Ferro Alloys and steel industry. The group has achieved success in diverse aspects of business - manufacturing, trading, import and export. It is one of the largest merchant producers of High Carbon Ferro Chrome, Silico Manganese, Ferro Manganese & Ferro Silicon in India and exports 70% of Ferro Alloys manufactured to various countries across the world. 

RFTL started its journey in 2003 with a meagre capacity of 24,000 mtpa from its 2 nos. of 9 MVA furnaces in Bishnupur, West Bengal. Then with its continuous expansion every year, the same plant now has 5 nos. of 9 MVA furnaces with a total capacity of 90,000 mtpa.

In 2006, RFTL expanded its footsteps into the state of Odisha by installing an 110,000 mtpa manufacturing unit with 4 nos. 16.5 MVA furnaces at Kalinganagar Industrial Complex in Jajpur to manufacture bulk ferro alloys.

Recently, the company added another feather to its cap by fully commissioning its Manganese alloys production facility of 100,000 mtpa with 6 nos. 9 MVA furnaces in Haldia, West Bengal. The unit has got the status of being a 100% export oriented unit (EOU). 

Presently, with the total installed capacity of 300,000 mtpa, RFTL exports nearly 70% of its production.

Courtesy: Mjunctionedge

Resurge Mines and Minerals Ltd

BSE Code: 533017

Financials and other Statistics:

## CMP: Rs.2.66 in BSE and Rs.2.40 in NSE, as of 9th July, 2014.

## Face Value: Rs.10 (not Re.1),

## Book Value: Rs.26.49,

## Market Cap: Rs. 57.87 Cr, down from Rs.1500 Crore in 2008.

##  IPO Price Band: Rs.263 - Rs.272 Per Equity Share

## IPO Issue Date: Aug 11, 2008 - Aug 13, 2008

Major Triggers: 

(i) Mahalmiriya (Bauxite) Mines in Maharashtra, has got the approval from the authorities. The mining could start post monsoon, after some issues regarding the lease agreement gets solved.

(ii) The mining is already taking place in the Soapstone Mine, Dhelana, Rajashtan.

URL: http://www.resurgere.in/environmentalreport/dhelana-clearance30-3-2012.pdf

(iii Yelwan Jugai Bauxite Mine in Maharashtra and Satarda Iron Ore Mine are expected to get fast approvals from the  the current NDA government led by Narendra Modi.

(iv) The book value of the share of the company is Rs.26.49 and the market cap is only Rs.52.50 Cr. The market cap of the company is less than price of the machineries purchased by the company till now for the mining operations. So, you are getting the business of the company, Free? 

Approvals==>> 

a) Environmental Clearances

(b) Forest Clearances, etc.
No mining can take place without getting such clearances, even if the government allots mine to any company or business concern--it is mandatory. 

(v) The mining sector stocks are likely to boom in the coming days, after the recent landmark, Supreme Court verdict. At present even the stocks like SVC Resources Ltd (BSE Code: 512449), which are from the same sector is trading multiple times its face value of Re.1 (now Rs.10). Another stock, NMDC Ltd having face value of Re.1 is trading at Rs.173.65. Whereas Resurgere Mines and Minerals Ltd, having a face value of Rs.10 (not Re.1) is trading at Rs.2.40 in the NSE. Is it  not surprising? 

Clarifications of baseless Rumours: 
(a) The promoters holding came down due to GDR and other issues. It did not come down because they directly sold shares in the market. 
(b) At present there are three directors of the company and they are: 
## Subhash Sharma: Chairman & Managing Director
#  Mayur Shah: Ind. Non-Executive Director
## Alok Ambastha: Ind. Non-Executive Director
(c) One of the auditors did not want to sign the balance sheet, but the subsequent auditors had no problem. The said auditor, went to the media without informing the management of the company, which by any standard is a breach of trust and constitutes a type of criminal conspiracy; though the management decided not initiate any legal action against the said auditor. 
(d) The company during the last few years, was affected due to mining ban in many states of Indian union, besides, the UPA government had a very unfavorable policy towards the Iron Ore exporters and dealers. However, in future, as the mining policy gets changed the company hopes to do well.  
(e) Inspite of getting approvals, the company could not start the operations in Mahalmiriya (Bauxite) Mines in Maharashtra because of some problems in the lease agreement. Also, mining generally does not take place during the monsoon season, because they are open fields. 

Conclusion: Accumulate on dips and keep holding for a target of Rs.9-10 in the coming days. This is a turnaround story. On the downside, it can fall maximum upto Rs.2.30. In the NSE the price is already Rs.2.40. 
Also, note that some panic selling due to vested interest groups, is going on, which will not be sustained in the long run. 

Rohit Ferro-Tech Ltd: Buy on dips

CMP: Rs.11.90

Introduction: Promoted by Mr. S K Patni, Rohit Ferro-Tech Ltd (RFTL) started its journey in 2003 with a humble capacity of 24,000 TPA from its 2 x 9 MVA furnaces in Bishnupur, West Bengal. 

In 2006, RFTL also expanded its wings into State of Orissa by installing a 110,000 mtpa manufacturing unit with 4 nos. 16.5 MVA furnaces at Kalinganagar Industrial Complex in Jajpur to manufacture bulk ferro alloys.

Recently, the company added another feather in its cap by fully commissioning its Manganese alloys production facility of 100,000 mtpa with 6 nos. 9 MVA furnaces in Haldia, West Bengal. The unit has got a status of 100% EOU.

Presently, with the total installed capacity of 300,000 mtpa, RFTL exports nearly 70% of its production.

Furthermore the company is setting up an additional 33 MVA SAF at its jajpur unit. The company is also in the process of setting up a 67.5 MW Captive Power Plant at its jajpur unit.

In an attempt to forward-integrate, RFTL has set up a 100,000 mtpa Stainless Steel manufacturing facility at its Bishnupur unit. On the side of backward integration, RFTL has acquired economic interest in Coking coal and Thermal coal mines in Indonesia.

Since its inception, the Company has come a long way to position itself as a leading producer of High Carbon Ferro Chrome. RFTL has accreditation like ISO 9001:2000, a Four Star Export House Status, Membership of ICDA (International Chrome Development Association), IMNI (International Manganese Institute) etc. The company recently got an award from EEPC as “Star Performer In Product Group - Medium Enterprise” on all India basis.

The company carries a part of its business activity through a Wholly owned Subsidiary Company M/S SKP Overseas Pte. Ltd incorporated at Singapore. During FY13, the Wholly Owned Subsidiary Company has acquired 60% equity stake in a company M/S PT Bara Prima Mandiri of Indonesia, a Company in which M/S SKP Overseas Pte. Ltd already had 60% economic interest . By virtue of the acquisition of equity stake M/W PT Bara Prima Mandiri of Indonesia has become a subsidiary of M/S SKP Oversea Pte. Ltd.

Since its inception, the Company has come a long way to position itself as one of the leading producer of High Carbon Ferro Chrome. RFTL has accreditation like ISO 9001:2000, a Two Star Export House Status, award for Export Excellence by EEPC, Membership of ICDA (International Chrome Development Association), IMNI (International Manganese Institute), etc.

Shareholding Pattern: The promoters  hold 72% (controlling) stake in the company while the general public holds 28%. In the general category,  Shriramrathi Marketing Pvt Ltd, Anumati Stock Broking Pvt Ltd and Quest Financial Services Ltd holds more than 1% stake in the company. 

Triggers: 

• During FY13, the company had allotted 3, 35, 00, 000 equity shares at Rs.10 each on preferential basis at a premium of Rs.50 per share aggregating to Rs.201.00 Cr to the entities belonging to promoter group and strategic investors belonging to the non promoters group. 
• The company is expected to install 67.5 MW captive power plant at its Jajpur unit. The basic engineering, civil work and structural fabrication has progressed significantly. All major equipment having long lead time has been received at the site and erection work is at the final stages. Since, Ferro-alloy sector is power intensive, it will save a substantial part of the cost of production. 
• The basic engineering, civil and fabrication work of 33 MVA Arc Furnace at Jajpur unit is  under progress. The company has placed order for all major Plant and Machinery and the delivery of the plant and Machinery are as per Schedule. 
• The company has acquired 60% equity state in a coking coal mine in Indonesia owned by M/S PT Bara Prima Mandiri Through its Subsidiary M/S SKP Overseas Pte. Ltd, Singapore. The mine located in Central Kalimantan province of Indonesia has an estimated coking coal reserve of 10 MN tonnes. 
• The company is also having 60% economic interest in thermal coal mine in Indonesia owned by M/S PT Palopo Indah Raya through its aforesaid subsidiary. The mine located in Central Kalimantan Province of Indonesia has an estimated thermal coal reserve of 20 MN. 
• The Finance Minister in this budget could rationalize the tax and duty structures of the ferro-alloys sector. There are already talks of raising the import duty, so that foreign countries are not able to dump their cheap products in Indian markets, easily.  
• India enjoys a natural advantage as it has the fifth-largest in chrome ore with a 100 million tones estimated reserve and the sixth-largest in manganese ore with an estimated 176 million tones reserve.

Conclusion: Ferro Alloys are used in the production of steel as de-oxidant and alloying agents and act as an intermediate industry to the iron and steel sector. The demand and prices of ferro alloys depend on the production and consumption of steel which in turn depends upon its user industries. 

Many Ferro-alloys companies, has substituted iron ore with pallets.The UPA Government during their tenure introduced duty on export of Iron ore fines, which has resulted in reduction in export from 25 million tons earlier to 3 million tons. Due to this, there has been improvement in availability of Iron ore fines for conversion  to pellets. Further, there are many pellets plants which are expected to come online in the next 6-12 months. This will in turn reduce the dependence of industry on sized ore and will  in-fact be a new source of raw material, thus increasing the overall availability substantially. With this new source of raw  material not only the availability of will increase but prices will also come down to normal level. Most of these plants are either merchant plants or their capacity is more than what is required by them captively for their own consumption. This will further increase the availability of raw material. 

Moreover, this will in turn reduce the dependence of industry on sized ore and will in-fact be a new source of raw material, thus increasing the overall availability substantially. With this new source of raw material not only the availability of will increase but prices will also come down to normal level. Most of these plants are either merchant plants or their capacity is more than what is required by them for their own consumption. This will further increase the availability of raw material.

Due proactive steps taken by the State Governments and favourable Supreme Court verdict in Karnataka the mining sector is slowly limping back to its normal operational level. 
Further, Orissa Government has also taken proactive steps and has recently allowed restart of mining in some of the mines, which is expected to alleviate the scarcity of raw material. The yield from Pellets is higher than yield from poor quality material.

However, the UPA government also imposed a 5% export duty on iron ore pellets, an agglomerated form of the raw material. Now, while the Associated Chambers of Commerce and Industry of India was of the view that the government should raise the export duty on iron ore pellets even further to safeguard the interests of India’s steel industry, the Pellet Manufacturers’ Association of India has demanded that commerce ministry remove the duty, claiming it was choking the industry and would stunt growth. 

Insiders have told the media that the Steel and Mining Minister seems inclined to continuing allow the export tax to stand. When asked for his reaction, Tomar told news agency, the Press Trust of India (PTI), that a conciliation had to be reached on the two issues, and that his ministry was studying both demands.

Though the Steel demand was low in 2012-14 due to continuing economic crisis and fall in the Indian GDP growth, however, spurt in demand is expected in 2014- 15. The Government of India has planned to invest about Rs.56.32 lakh crore in infrastructure during the 12th Five Year Plan period 2012-17. This will augur well for the industry.

Besides, the market cap of the company is only Rs.136.30 Cr and the book value of the shares of the company is Rs.50.87, as compared to the CMP of Rs.11.90. 

Going forward, the demand for Ferro Alloys is excepted to improve due to increase in investment plan in road sector, expansion in railways, increase in volume by automobile sector, uses of special steel in power sectors and refocus on the manufacturing sector. 

The scrip should bounce from the oversold positions and move up on the optimism of new power plant coming up. The stock could be accumulated around the support region of Rs.11.70-12, for a target of Rs.16-17 in the coming days. 

Sadananda Gowda Asks Cabinet to Allow FDI to Revamp Railways

Railway Projects, in NE, as of October 26, 2013
Photo: Business Standard

[Editor: The Railway minister's budget lacks vision and maturity. Moreover, his decision to start, Bullet Trains in the Mumbai--Ahmedabad route, is totally lopsided and devoid of any reasoning, when there are already more than 57-trains. The Bullet Trains should have been ideal for the Mumbai--Pune route (or at least Kolkata--Jamshedpur route) where many people come from Pune to work in Mumbai (Bombay), On the other hand though Assam sent one of the highest number of BJP MPs, in 2014 elections, nothing much came into its kitty. 

Moreover, the railway minister is silent on the  on the much-delayed Lumding-Silchar broad gauge project of North-east Frontier Railway (NFR) in Assam which has so far (in the last 15-plus years) made only 80% progress and the much-waited mega block in the 201-km section will be taken up from October 1, 2014. The project started in 20th Century and now we are already 13 years past in 21st Century, but no one knows when this project would get completed. The suffers are basically, the people of South Assam, Tripura, Mizoram and South Manipur, apart from the people of North Cachar Hills. The markets have rightly gave it a Thumbs Down, to such substandard budget. Therefore, don't expect much from Arun Jaitleys' Union Budget which is coming on 10th July, 2014. Till now NDA Government has survived only on hype, nothing came much on the table, except the bold decision to hike railway fares. At end I would like to lament that: "Whoever is sent to Delhi, he / she turns out to be "Shakuni Mama" (Mahabharata)"]

New Delhi, July 08, 2014: Railway Minister Sadananda Gowda, presenting the Narendra Modi government's first Rail Budget today, promised to seek increased foreign and domestic private investment to fund modernization of the country's huge but badly stretched network. 

The Railways need an "immediate course correction" after years of mismanagement, Mr  Gowda told Parliament as he outlined ambitious plans for the network that carries 23 million people daily. He did not raise passenger fares again, but defended a recent and unpopular fare hike of 14.2 per cent recently, saying, "The medicine appears bitter in the beginning, but is like nectar in the end." That revision, he said, would bring in additional revenue of about Rs. 8000 crore.

In a post-budget briefing, he also said that the Railways would continue with a Fuel Adjustment Cost formula under which there would be periodic hikes in fares and freight rates once in six months.

He announced a slew of passenger-focused measures - including proposing India's first bullet train to run on the Mumbai-Ahmedabad sector and 50 other new trains, several of them high speed. He promised cleaner, safer trains and stations and better food. 

He also promised Wi-Fi on trains and easier ticket booking - 7200 e-bookings per minute.

Prime Minister Narendra Modi said Mr Gowda's budget "shows it's planned for the railways as a whole, not piecemeal planning as was done till now. It is not an ad hoc budget. It shows where we want the Railways to head and also where we want the country to head through the Railways."

Mr Gowda's main emphasis today was on making the Railways profitable. "I can also get many claps from this house,  by announcing many new projects but that would be rendering injustice to the struggling organization," Mr Gowda said, adding that of every rupee earned, the Railways spends 94 paise, leaving only six paise. "This surplus, apart from being meager, is continuously on decline due to non-revision of fare." (Hungry Kya? Better Food on Trains, Promises Rail Minister)

Only government funding, the minister said, was insufficient and so, he was seeking the union cabinet's approval for allowing foreign direct investment or FDI in the industry.

He also sought greater private participation and exhorted corporates to adopt stations. The bulk of future projects would be public-private partnership or PPP funded, he said, emphasizing on the need to prioritise and complete projects, adopt safety standards of international level and encourage development.

He said he aimed to make the Railways the biggest freight carrier in the world, but said at present its share of total freight in the country had declined to only 31 per cent.

Mr Gowda, famous for his smiling countenance, did not smile much today as he accused previous governments of running the Railways for political benefit; more than half the projects worth lakhs of crores announced in the last 30 years had not been completed, he said, as new announcements were made every year. 

Courtesy: NDTV Ltd

FIIs' and DIIs' Trading Statistics

Contrary to the popular perception, FIIs were net buyers to the tune of Rs.422.72 Cr of India equities. However, it is the DIIs who sold Rs.399.56 crores of shares in the bourses today, i.e. on 8th July, 2014. 

Budget 2014: Raise duty-free liquor allowance to 4 litre for travellers, says ASSOCHAM

[Editor: According to Moneycontrol.com, 24 June, 2014, the ace Indian investor, Rakesh Jhunjhunwala is betting his chips on the Indian liquor industry and sees tremendous potential. He is positive on Vijay Mallya owned United Spirits Ltd and is holding the shares of Radico Khaitan Ltd]

NEW DELHI, Jul 3, 2014: Trade body ASSOCHAM today asked the government to raise the duty-free allowance for incoming international air travellers from two litres of liquor to four, saying 75 per cent of the total purchases was of wines and spirits.

Maintaining that duty-free sales at Indian airports was estimated to be around US $ 350 million annually, the ASSOCHAM said about 65 per cent of the total sales was from arrival duty-free shops and three-fourths of it consisted of liquor. 

An additional two litres of duty-free liquor sale would generate an estimated US $ 125 million extra, it said in a letter to Finance Minister Arun Jaitley ahead of the budget.

"To promote tourism and stimulate buying on international arrivals, many countries have a higher duty-free quota for travellers provided they do shopping at the arriving airport," the organisation said.

It gave examples of several countries including the European Union, the UK, Brazil, Sri Lanka, Dubai and Singapore to show that these nations allowed a higher quota if the wines and spirits were bought at their airports on landing. To compete with this, the government should allow duty- free import of additional two litres, as it would help enhance revenues to the airport operators including Airports Authority of India and the government, the ASSOCHAM said.

Courtesy: The Economic Times

Budget 2014: Stainless Steel Body for Duty Hike to Check China Imports

New Delhi, July 06, 2014: Stating that the share of Chinese stainless steel products has touched about 30 per cent in the Indian market, the Indian Stainless Steel Development Association (ISSDA) has demanded doubling the import duty on these to 10 per cent in the upcoming budget to safeguard interests of the domestic industry.

In a statement, the stainless steel body said Chinese producers were enjoying advantages like low power tariff and various forms of direct and indirect support provided by the Chinese government.

These were being dumped in India at the cost of domestic industry, it said, adding that the share of Chinese flat stainless steel products into the country had risen to 30 per cent.

"The basic customs duty on import of Stainless Steel Flat Products in China is 10 per cent as opposed to 5 per cent duty in India, while it is 14 per cent in Brazil," it said.

"Also, the import duties on raw materials like scrap, nickel and Ferro nickel is virtually nil in China as compared to 2.5 per cent in India," the statement said, adding that this gives the Chinese mills far higher levels of protection as compared to Indian manufacturers.

It further said the problem of trade imbalance is especially pronounced in the industry where China now accounts for almost 50 per cent of total stainless steel global production in the world.

India, on its part, witnessed a huge surge in its imports to 3,07,266 tonnes in 2013-14 from 1,78,611 tonnes in 2009-10, the industry body said.

On the contrary, Indian companies have made a huge investment of over Rs. 25,000 crore in the last few years and are reporting losses and that this may result in NPA due to the high import of stainless steel from China.

For April 2014, stainless steel exports data indicate an increase of 22 per cent during April to 3.9 lakh tonnes.

"Although India is the world's second-largest consumer and third-largest producer of stainless steel, the nation's average per capita consumption of stainless steel is only about 2 kilos, whereas the global average is 5 kilos," ISSDA president NC Mathur said.

"To address these challenges and meet development goals, an import duty hike is really needed to create a level-playing field for domestic steel producers because China uses dumping and other unfair trade practices to enter foreign markets," he said.

"It would also be in the national interest to abolish customs duty on the key raw materials so that Indian steel producers remain globally competitive and meet the challenge of cheaper Chinese products head on."

Courtesy: NDTV Profit

Narendra Singh Tomar, is likely to bring amendments, to more than half-a-century old Mining Law

Photo: www.narendramodi.in

NEW DELHI, July 2, 2014: Steel and Mines Minister Narendra Singh Tomar has written to states seeking their co-operation for evolving a transparent system of allocating mines.

The minister is slated to meet Chief Ministers of various mineral-rich states to take their views on bringing amendments to the more than half-a-century old mining law, an official statement said.

Tomar is likely to meet Chief Ministers of Goa and Rajastan tomorrow and is slated to meet Karnataka Chief Minister on Friday, it said.

Expressing concern over negative public perception with regard to mining, Tomar has urged states to come together to evolve a "transparent and efficient system of allocation of leases along with a robust regulatory framework that best serves India's interests".

"The letter also enunciates the need to safeguard environmental concerns and clearly spells out that 'intergeneration equity' should not be compromised in the process of easing the mining sector," the statement said.

Priorities laid out include re-invigorating of the mining sector, improving investment scenario and reaping benefits of enhanced technology and best practices, it added.

Tomar has written to the Chief Ministers soliciting their views on amendments to the Mines and Minerals (Development & Regulation) Act 1957 and relevant rules to find "expeditious and acceptable solutions" to the mining issues confronting the country.

Courtesy: The Economic Times

Will India Choose Steel or Iron Ore in its Budget Battle?
~by Sohrab Darabshaw 

Mr.Narendra Singh Tomar
Photo: BJP.Org

JULY 7, 2014: India’s new Steel and Mines Minister Narendra Singh Tomar needs to tread carefully. He must recommend a path that makes economic and financial sense, but it also must not anger either of the two lobbies, steel or iron ore. While one issue relates to mining, the other, to steel. In the previous governments, such a conflict never arose since both were separate ministries handled by different ministers. In the new Bharatiya Janata Party (BJP) Government, while the ministries continue to remain separate, there’s one minister in charge of both, so therein lies the rub.

The miners, inclined towards exports, hold the view that due to the paucity of ore, high duties have made exports not viable, resulting in job and revenue losses. The steel majors, on the other hand, cite the same iron ore shortage to prop up their case that India’s 30 percent duty on exports, imposed in late 2011, should be continued, stating that restrictions on mining of iron ore in the recent past had led to an estimated drop of 35 percent in India’s total annual output of ore, presenting a “grave challenge” within the steel industry.

Until recently, India was the third largest exporter of iron ore, but the combination of a series of mining bans and the export tax have dropped it a few nothces. Exports plummeted to just 14.42 million tons in 2013-14 compared to 117.37 million tons in 2009-10. During the period, India’s ore imports went up from 0.89 million tons to 5 million tons. For a while, India had turned into a net importer of iron ore.

The previous government also imposed a five percent export duty on iron ore pellets, an agglomerated form of the raw material. So, while industry association, the Associated Chambers of Commerce and Industry of India was of the view that the government should raise the export duty on iron ore pellets even further to safeguard the interests of India’s steel industry, the Pellet Manufacturers’ Association of India has demanded that commerce ministry remove the duty, claiming it was choking the industry and would stunt growth.

Anil Agarwal, Chairman of Vedanta, one of the world’s biggest diversified metals and mining companies, has supported the mining industry’s demand to reduce the export duty. In a tweet that he sent out, he said India could earn $10 billion if the government allowed the export of iron ore.

So how’s the Steel and Mining Minister planning to tackle the dichotomy? Insiders have told the media that he seems inclined to continuing allow the export tax to stand. When asked for his reaction, Tomar told news agency, the Press Trust of India (PTI), that a conciliation had to be reached on the two issues, and that his ministry was studying both demands.

Which is not saying much at all, is it?

Courtesy: Metal Miner

Radico Khaitan Ltd: Bulk Deal (Historical Data)

Now, you can see from above, two very well known names in equity investing space: Mr.Rakesh Jhunjhunwala (RJ) who bought the shares of Radico Khaitan Ltd at Rs.167.75 and Prof. Kedal S Manekar at Rs.177.47. 

I feel most of you are perhaps are aware of Mr.RJ and his long term investing philosophy, but do you know that Prof. Mankekar is also a well known celebrity investor in the Indian Capital Markets?

The investments of the Mankekar family are in the name of Prof.Mankekar, his wife Laxmi and his son Kedar (Prashant has pointed out that some investments are made in the name of Om Kedar Investments also). CLICK HERE.

Sesa sees six-fold jump in iron ore output, Goa mining set to resume

[Editor: It is really surprising why the BJP leadership has not removed the Chief Minister of Goa, Mr.Manohar Gopalkrishna Prabhu Parrikar, after creating such mess both in the mining sector and casino business, apart from state's mounting debt!]

Photo: Goa Beach Huts

NEW DELHI Thu Jul 3, 2014: Sesa Sterlite Ltd expects its iron ore output to surge six fold this fiscal year as it resumes production in Goa in September after a 19-month mining ban in the state, an executive of the country's top private iron ore miner said.

A pick up in production as mines in India's biggest iron ore-exporting state restart could hurt global prices of the steelmaking raw material that have already lost almost 30 percent this year in an amply supplied world market.

Sesa Sterlite's total iron ore output from India, where it operates in Goa and neighbouring Karnataka, is expected to reach 9.29 million tonnes in the year to March 2015 from about 1.5 million a year ago, Aniruddha Joshi, a vice president at the firm, told Reuters in an interview on Thursday.

Most of the output will be exported as Indian steelmakers are not keen on buying the low-grade ore from Goa at global benchmark prices, Joshi said. The country is currently the world's tenth largest exporter of iron ore.

"It'll suffice to say that only China can use Goan ore," Joshi said. "Because it's hematite coarse fines which can be mixed with very fine concentrates that are only produced in China in high quantities."

The Supreme Court in April lifted the ban in Goa that was aimed at curbing illegal mining, but ordered firms to renew mining leases and environmental clearances before restarting work. It also capped Goa's annual output at 20 million tonnes.

Tom Albanese, chief executive of Vedanta Resources Plc that controls Sesa Sterlite, had earlier said its unit's operations in Goa would restart around October.Shares of Sesa Sterlite have surged more than 50 percent since the ban on mining in Goa was lifted.

CHINA DRIVEN

Goa rose to become India's biggest iron ore exporter over the past decade after China's insatiable steel mills started consuming even inferior grades, prompting many fly-by-night operators in the state to flourish with scant regard for rules.

But Joshi said Sesa Sterlite had never done anything wrong.

"I've not done anything wrong, no authority has found fault with any of my operations, and I have done all my applications properly," he said.

Sesa Sterlite had a capacity to produce about 14.5 million tonnes in Goa, or one third of the state's average output per year, before the ban. But now with the court-imposed limit, the firm's output is likely to be capped at 7 million, Joshi said.

In Karnataka, where there was a similar mining ban until last year, Sesa Sterlite's production is limited to 2.29 million tonnes per year, less than half of its original capacity.

Despite the restrictions and an export duty of 30 percent that pushed India down from being the world's third biggest exporter of iron ore, Joshi believes the country will still be able to find buyers in China without having to cut prices.

But the slide in global prices of the raw material has toughened competition among suppliers to China, prompting even top miners such as Brazil's Vale and Rio Tinto to offer discounts.

Joshi accepts that there are challenges.

"The problem is that if the government and courts in India decide to open the mines and close them at their will, finding a reliable customer and making them believe us will be tougher than finding a market."
(Additional reporting by Manolo Serapio Jr; Editing by Himani Sarkar)

Courtesy: Reuters

Radico Khaitan Ltd: A Low P/E Scrip

CMP: Rs.12.15

The domestic liquor industry is dominated by two large groups, the Vijay Mallya -controlled UB group and the Shaw Wallace group, which is controlled by the late Manu Chhabria’s family. The two enjoy a combined market share of about 55% in IMFL and about 70% in beer.  

The Indian Constitution says that, “The state shall endeavor to bring about prohibition of the consumption of intoxicating drinks”. But the liquor industry is one of the largest contributors to state revenues; the loss of which can severely affect their cash flows. Also, it is difficult to enforce prohibition given the nature of the demand for liquor.

Radico Khaitan Ltd (the 3rd or 4th largest player in the alcoholic beverage market) has a P/E of ONLY 20.92, against Industry P/E of 80.18. Even United Breweries Ltd is trading at a P/E of 83.59, while United Spirits Ltd is trading at a P/E of 106.95 and Empee Distilleries Ltd is having a P/E of whooping 165.94. Also, one of its nearest competitors, Jagatjit Industries Ltd is running into losses worth more than Rs.26 crores.

Therefore, a decent P/E re-rating can take the stock above Rs.200 or at least near Rs.165-170. The ace investors, Rakesh Jhunjhunwala bought the share in January, 2014 at Rs.167.75 per share. 

Conclusion: Government regulations at every level have affected the Indian liquor industry, introducing structural rigidities. Apart from the high level of taxes and levies (that account for up to 65% of the consumer price), regulations pertaining to licensing, creation or expansion of brewing/distilling and bottling capacities, manufacturing processes (grain-based or molasses-based), distribution and advertising impinge on the industry. Further, liquor being a state subject, every state has different regulations (including those on distribution) and tax rates for the industry apart from restrictions as well as levies on the inter-state movement of liquor.

These regulations have impacted the industry on all fronts. The high level of taxes and levies and the fact that companies have little control over distribution systems mean limited pricing flexibility. Consequently, players have low margin levels. Then, as a result of the restrictions on capacity expansions and inter-state movement of liquor, large players have either acquired or entered into contract manufacturing and bottling agreements with local players in various states. 

Therefore, the taxes and duties in the Alcoholic Beverage Sector has to be RATIONALIZED to provide it, a level playing field to compete in the international market. If the government is allowing the sale of liquor in the Indian Union, then it cannot go on showing step-motherly attitude towards the sector, for years. It is high time that the government of India takes note of the above facts and act accordingly, while preparing the Budget: 2014-15.

A strong buy is recommended in the counter with a short term Target of Rs.128-129.

Confidence spurs Indian M&A surge

The value of M&A deals involving an Indian company has seen an increase this year compard with same period in the last two years. 

Merger and acquisition deal value 
Source: TheAustralian

JULY 04, 2014: Deal-making activity in India is off to its best start in at least three years, as companies and investors become optimistic about the country’s prospects.

Nearly $US35 billion ($37.3bn) worth of mergers and acquisitions involving an Indian firm as either a target or a buyer were announced in the first half of this year, versus $US21bn in the first half of last year and $US26.5bn in the same period in 2012, according to data from Dealogic. The last time India experienced this level of deal activity was in the first half of 2011.

Investment bankers say many deals that hung in the balance last year as India’s economy slowed have lately started to close. Companies have become more confident that India’s growth will pick up, partly due to optimism over the new government that came to power in May. Prime Minister Narendra Modi campaigned on a pro-business platform.

“There is certainly euphoria about what the new government can do,” said Ajay Arora, head of India investment banking at Ernst & Young.

Among the large deals announced this year are Mumbai-based Sun Pharmaceuticals Industries’ acquisition of Indian drugmaker Ranbaxy Laboratories for nearly $US4bn, Vodafone’s buyout of minority shareholders in Vodafone India, the British telecom giant’s Indian unit, for $US1.6bn, and Diageo’s acquisition of a 26 per cent stake in alcoholic-beverage company United Spirits for $US3.14bn.

Acquisitions by foreign companies are on the rise. In the first half of this year, inbound merger-and-acquisition deals totalled $US14bn, rising from $US11bn in value a year earlier, according to Dealogic.

Bankers say part of India’s current attraction is that its economic prospects look relatively better than some other countries in Asia. In China, growth has been slowing, and in Thailand a military junta recently seized power.

“India is seen as relatively safer in terms of political stability and security,” said Ganeshan Murugaiyan, head of India investment banking at BNP Paribas.

Investment bankers say companies in India’s fast-moving consumer-goods sector continue to be prime targets for overseas buyers, because these companies are expected to keep recording healthy returns as the economy picks up. Foreign companies have been looking at makers of liquor, including Delhi-based Radico Khaitan, which makes 8PM whiskey, Mumbai’s Tilak Nagar Industries, which makes Mansion House brandy, and Bangalore’s John Distilleries, bankers say. All three companies were unavailable for comment.

Indian pharmaceutical companies, which make generic drugs, also continue to be attractive targets for foreign firms.

Over the coming months, bankers say deal activity will also be driven by large Indian companies looking to dispose of assets to cut debt levels that grew when the country was booming five to seven years ago.

In February, Indian construction conglomerate Jaypee Group sold two of its hydro-electric power plants to a consortium led by Abu Dhabi National Energy Company for about $US1.6bn, in a bid to cut its debt.

“Pressure on some of those companies to sell will remain,” said Sanjay Bhandarkar, managing director at Rothschild (India).

Deals would also be driven by private-equity funds looking to exit investments that were made five to seven years ago, said Anup Bagchi, executive director at Mumbai-based investment bank ICICI Securities. Private-equity funds have had trouble exiting their investments over the past two to three years as they found it difficult to raise new equity locally and as the Indian rupee lost value against the US dollar.

Bankers caution that though many discussions are under way, deals will close only if Indian sellers are realistic about valuations. As Indian stocks have risen this year, “expectations of Indian founders have also risen”, said Vinod Wadhwani, director of investment banking at Mumbai-based Ambit Corporate Finance.

Bankers say overseas acquisitions by Indian companies this year will be limited mainly to major energy companies, which have historically been on the hunt for foreign coal or gas reserves.

The “search for resources will always be there,” said Anantharaman Venkataraman, head of investment banking at Standard Chartered in Mumbai. He said state-run ONGC Videsh, the overseas investment arm of state-run Oil & Natural Gas Corporation, and Coal India will continue to look at acquiring overseas assets.

Both companies declined to comment.

Courtesy: The Australian

Radio Khaitan Ltd: Do you know?

 CMP: Rs.112.15, 
R1--Rs.130 & R2--Rs.149; S1--Rs.100 & S2--Rs.85.

Japan's oldest liquor company Suntory Holdings and India's Radico Khaitan created an alliance whereby Radico got the rights to market Suntory's Yamazaki single malt and Hibiki blended whiskies in India. 

Japanese liquor makers such as Suntory are keen to expand into a growing market like India as liquor sales plummet in a rapidly aging home market, where the total population is expected to decline by a third in the next few decades. 

Spirits sales in India are expected to reach 360 million cases by 2017 from 261 million cases as more than 60% of India's population is between the 15-45 age bracket.

Radico Khaitan Ltd accounts for 18 million cases in the Indian spirits market, with 8 PM whisky alone crossing four million cases. Suntory has been trying to ramp up its presence in India through acquisitions. In 2009, it launched an unsuccessful attempt to acquire a stake in Indage Vinters. 

The Radico Khaitan Ltd acquisition, if and when it happens, will underscore multinational liquor companies' hegemony over the Indian market. The Khaitans began talks with Suntory in 2011, but a deal did not materialise due to issues over majority control, said industry experts.

Earlier there were media reports that the Japanese spirits major is expected to pay close to Rs.870 crore for the stake, valuing Radico Khaitan Ltd at Rs.3,500 crore, or close to 20 times its FY13 operating profit. British drinks giant Diageo bought 53.4% in Vijay Mallya's United Spirits (USL) for close to Rs.12,000 crore in November 2012 at a valuation of 20 times the operating profit of USD.

After Market Opening Chart Check

The Nifty moved in a range yesterday, after it pulled a gain on last Wednesday and closed with a nominal loss of 10 points. Nifty traded dull during all through the day after an initial volatility. It made a high of 7754 and low of 7707 and finally settled at 7715.
Nifty is now trading above 7700 and  hence a new uptrend seems to have resumed. Nifty is slowly moving towards an uncharted territory with no visible resistance. Long is a Hold with a SL of 7430. There was some selling in the small cap space yesterday, but today, the small cap index is marginally up along with the IT and Pharma indices. The investors are therefore, suggested to buy only good companies and keep holding. However, since India VIX is up more than 4%, you should keep your Stop Losses ready, in case of any short term fall.The Nifty (Spot) is now trading at 7690.

Resistance: N/A
Support: 7700 /  7680
The benchmark US indices ended firm on Thursday, with the Dow Jones breaching the 17000-mark for the first time on the back of higher-than-expected monthly jobs data.
Asian indices are trading flat to positive, on positive cues from the Wall Street overnight.
Fundamentally speaking, the domestic share indices are expect to cut their losses and close in the green on the positive optimism from easing of the crude oil prices by ~$4/bbl from their recent highs and taking cues from the positive trend in global markets. The Union Budget 2014-15, which is due on 10th July will provide further direction to the market.

Today's call: 
(i) Buy Radico Khaitan Ltd at Rs.13.50, T--Rs.140, SL--Rs.109. In this company the ace investor, Rakesh Jhunjhnwala  (RJ) is holding stake. Some of the scrips like A2Z Maintenance Engineering Services Ltd (Rs.21.90),  Shashun Pharma Ltd (Rs.160.70), etc where the RJ has stake are already in the Upper Circuits. In January, 2014, the big bull Rakesh Jhunjhunwala's firm Rare Enter purchased 6.85 lakh shares (0.5% stake) at price of Rs.167.75 a share. Therefore, the counter may witness upmove. The scrip has not taken part in the current rally in a major way, and hence there is opportunity to mint money. 
(ii) Those who have bought the shares of Western India Shipyard Ltd at  higher prices are suggested to average at around Rs.2.70-2.79. The scrip is on an uptrend on the Budget Optimism and could reach Rs.5, where you should book profits.
Important: 
(i)There are some optimism regarding 49% FDI in defense deals, and some of the stocks in this sector like Rolta Ltd (Rs.11.7.5) is already buzzing. Even Avantel Ltd (Rs.78) is showing some upward momentum. However, the scrip have already move up much on this optimism and hence it would be prudent to buy the scrip (if at all you think to play on this story), only in declines. 
(ii) The debt ridden Lanco Infratec Ltd (Rs.12.12) is in talks with some strategic investors for selling stake in its thermal projects, and due diligence for the same is in process.  
(iii) Network18 Media and Investments Ltd founder Raghav Bahl, who resigned on May 29, 2014 after Reliance Industries Ltd took control of the company, is likely to return as a director.
(iv) Hatsun Agro Product Ltd (Rs.276) commenced commercial production at dairy plant in Poolam village in Tirunelveli with effect from Jul 1, 2014.

Resurgere Mines and Minerals: Location of Mines

CMP: Rs.3.22 (BSE in Lower Circuit) and Rs.2.70 (NSE in Upper Circuit)

Inference: Strong Buy 
Target: Rs.10 plus

Company Overview:
Resurgere Mines & Minerals India Limited is a Public Limited Company engaged in the business of extraction, processing & sale of Ore and exploration & development of mining assets. Presently the Company is enjoying long term raising and purchasing rights for Bauxite Mine in the State of Maharashtra and mining rights for Soapstone in the State of Rajasthan.

The Company has also 99.98 % equity holding in Shree Warana Minerals (India) Pvt. Ltd. having another bauxite mine in the State of Maharashtra through its wholly owned subsidiary i.e. Warana Minerals Private Limited. 

The mining is already taking place in Soapstone Mine in Dhelana, Rajasthan. In case of some of the mines, the company had been given allotment, but the approvals in the form of environmental and forest clearances are yet to be obtained. This is normal, for commencement of any mining activity. If the clearances are given fast by the current NDA government, then mining activities, can start at any time, after the monsoons.

Initial Mine Development Expenses:
In open pit mining operations, removal of initial overburden and other barren waste materials are necessary for economical extraction of ore. The process of mining overburden and waste materials is referred to as stripping. The management has decided to amortise such expense in 60 months from the date of incurrance of the expenditure at Maharajpur Mines.
Expenses on initial development at “Tatibha Mines” continue being amortized over a period of 5 years from the month in which the expenditure is incurred as estimated by the management.

Subsequent Mine Development Expense:
During FY13, the Company during the course of excavation activity at the Nuagaon mine situated in the State of Orissa has found soft ore (blue dust) in the said mine. Soft Ore has significantly lesser economic value and the company after considering all commercial implications has decided to discontinue excavation activity on the said site within the mine. The company has already started development of an alternate site immediately adjacent to its existing mine site. The management has decided to amortise the expense in 18 months from the date of incurrance of the expenditure. 

Important: 
Face value of equity shares has been consolidated from Re.1 to Rs.10 each with effect from 15th June 2012. (Shareholder’s approval was taken by way of postal ballot, of which the results were declared on 20th March, 2012. Corporate action with stock exchange was done with effect from 15th June, 2012, the record date)

Subsidiary Companies:
As on March 31, 2013, it has six subsidiary companies, namely:
1. M/s Warana Minerals Private Limited
2. M/s Shri Warana Minerals (India) Private Limited
3. Resurgere International FZE
4. M/s Resurgere Sponge Iron Limited
5. M/s Resurgere Ferro Alloys Limited
6. M/s Resurgere Industries Limited
The above companies are wholly owned subsidiaries of the company. M/s Resurgere Sponge Iron Limited and M/s Resurgere Ferro Alloys Limited were incorporated on 1st March, 2011 and the M/s Resurgere Industries Limited was incorporated on 10th March, 2011. In addition to the above, the company has one limited liability partnership namely “Resurgere Coal India LLP” with a 70%stake. 

Please Click on the Photo to get an Enlarged View

Associates:
a. M/S Exfin Shipping (India) - Partnership Frim
b. Victory Sponge Private Limited -Company
c. Eminent Steel private Limited -Company
d. Runwell Steel Private Limited -Company
e. Spear petroleum Private Limited -Company

Therefore, the shareholders are sitting on a "Huge Pile Of Wealth"--waiting to be unlocked and distributed. Am I right?

There are talks that Narendra Modi government will form a single window to hasten such clearances. The NDA government has already made arrangements for online submission of papers, to get the clearances.

It is surprising to see the shares of a company having so many MINES and whose IPO was placed in the price band of Rs.263--272, in August, 2008, is trading below its face value of Rs.10; and which perhaps can happen in India only, because here most investors are either not well informed about the markets or have no idea, about the scrip they are purchasing.  When I was asking all to buy A2Z Maintenance Engineering Services Ltd at Rs.11-12, many were reluctant, to touch it with a stick, and today I see, there are more than 13 lakh bids at Rs.20.90, as the scrip moves from one Upper Circuits to another. What do you call Indian Markets? Immature?

Also, have you seen, a stock, hitting the UPPER CIRCUITS in one EXCHANGE (NSE) and the LOWER CIRCUITS in another (BSE), on the SAME DAY (and at the same time) in India. Our Stock Exchange Regulators are really, world-class, who can create such miracles, unparalleled in the world.....Huh!! Another thing is that in one exchange the circuit limit for Resurgere Mines and Minerals Ltd is 4.72% and in another it is 3.85%--don't know which fertile brains are regulating such activities in BSE and NSE. Do they deserve Nobel Prize in Economics? Think!!